Healthcare Today

While Waiting on The Supreme Court: What is happening to Health Care Costs and Insurance?

For the last six months, I’ve served on The Woodlands, Texas Chamber of Commerce Health Care Program Committee. These efforts culminated on April 27th with a conference that featured health care providers, hospital CEO’s, health insurance professionals, and a Congressman. As business owners and managers, these issues affect us more than most. The following are some of the interesting facts and observations accumulated during my time on the Committee:

What are Some Key Healthcare Statistics that Affect Us All?

1) Medicaid only pays 60% of the price that other health care payors pay for the same medical procedure. This puts upward cost pressure on the non-Medicaid payors;
2) Americans over the age of 65 have an average of 3.5 chronic diseases / ailments;
3) On average, Medicare patients are treated at the cost of the service by the provider;
4) The average U.S. employee incurs $13,000 of medical related costs annually ($8,000 in insurance premiums and $5,000 in out of pocket expenses);
5) For the first time ever, Medicare costs dropped in 2011. No one knows why for sure;
6) Since 2006, employer healthcare costs are up 40%. Employee costs are up 80%; and
7) 15 Chronic health conditions account for 80% of all illness costs. These 15 conditions are primarily the result of 5 manageable risk factors: poor diet, alcohol, smoking, lack of sleep, and inadequate exercise.

Why is Health Care More Expensive in the US than in Most Countries?

1) Americans expect the best available healthcare administered perfectly, whether they pay for the service or not;
2) American health care providers are constantly introducing new procedures and treatments that people want regardless of the cost;
3) Due to high medical liability costs and risks, health care providers often over order tests and over perform services;
4) There is rampant fraud and abuse of the system by patients and providers, all of whom are working to have a third party (insurance company / government) pay the bill;
5) On average, it costs one billion dollars to have a drug approved for the U.S. market;
6) Large bad debt write-offs due to non-payors, and underpayments by medicare and Medicaid patients (about half of all patients); and
7) Americans spend about five times more for “end of life” costs versus European countries. Our last month is often spent in the I.C.U. In Europe, the last month is often spent in a hospice.

Interesting Notes on “The Patient Protection and Affordable Care Act (PPACA),” aka Obamacare, and the pending Supreme Court Ruling:

1) All of the health care industry and insurance presenters agreed that if the Supreme Court finds the individual mandate unconstitutional, yet upholds the rest of the law, that the system will immediately become financially unsustainable;
2) The PPACA adds 16 million people to the Medicaid rolls;
3) Health Insurance costs rose at a higher than average annual rate in 2011;
4) If the PPACA runs out of money, a panel of 15 unelected people will determine what services and/or care recipients will be dropped; and
5) Workers Compensation insurance costs are on the rise in most states, and experts attribute some of the increase to costs being pushed to workers comp by the PPACA.

What are Some Ideas for Lower Costs Going Forward?

1) Allow health insurance to be sold across states lines, as some state’s costs are much lower than others primarily due to fewer/lower coverage mandates;
2) Tie a person’s health care costs to how well he handles the 5 key manageable risk factors: poor diet, alcohol, smoking, lack of sleep, and lack of exercise. For example, if you want to smoke, go ahead and do so, but your health care costs will increase by the projected additional cost;
3) Move from a primarily employer provided health insurance system to an individual provided health insurance system which follows you wherever you go and isn’t dependent on with whom you are employed;
4) Increase deductible and out of pocket costs to give incentives to individuals to not over use health care providers;
5) Moving the care of end of life patients from the I.C.U. to hospice providers; and
6) Spend more on wellness programs. Every wellness dollar ($1) spent saves six ($6).

By Kurt D. Kelley, J.D.
President Mobile Insurance

Top 10 Dumb Management Ideas for Manufactured Home Retailers

Really?!? You did That?!?

Top 10 Dumb Management Ideas for Manufactured Home Retailers

1) Decide to save money by reusing old rickety wood steps without hand rails on all your show homes;
2) Sign an indemnification and defense agreement in favor of a home manufacturer for their product;
3) Overpromise on the characteristics of the home and tell the buyer that it will arrive in perfect condition and require no maintenance, and then ignore all customer service requests;
4) Never have transporters, installers, and other subcontractors sign written performance contracts in favor of you as the retailer;
5) Do Not verify that your sub-contractors are insured. Just take their word for it;
6) Have all your inventory on an unfenced, unlit lot, and not visible from the roadway;
7) Hire based on your “gut feeling,” forgoing background checks and job suitability tests;
8) Close all your sales with sloppy and incomplete business forms;
9) Allow sales personnel to close sales without management in attendance; and
10) Never, ever, discuss professional driving standards with all employees who drive in the course of their employment and do not have them sign Mobile’s Driver Safety Agreement.

Kurt D. Kelley, J.D.

President, Mobile Insurance

www.mobileagency.com

Dog Management

Community Management: The $20,000 Dog

It’s exciting. You just purchased a manufactured home community. It has fifty (50) sites, forty eight (48) of which are occupied by home owning tenants paying $300/month in rent. You were pleased to purchase it for $960,000, or $20,000 per site. And now that it’s time to begin managing the community, you discover three things. First, four of your tenants own large dogs (a German Shepherd, a Pit Bull, a Rottweiler, and a Chow). Second, your insurance agent has advised you that your insurance company strongly discourages allowing tenants to own such dogs and will non-renew or cancel your insurance if you don’t force the dogs out of the park. Third, all four dog owning tenants have nice homes, are good neighbors, pay their rent timely, manage their dogs well, and will leave if their dogs have to go. What do you do?

The standard answer is that you demand the dogs be removed, and hope you keep the tenants. Most insurance companies won’t underwrite a community owner with coverage that includes animal bites once they are aware vicious dog breeds are in the community. And if you do find an insurance company that will insure your property with these types of dogs in it, your insurance rates will increase dramatically. Historically, dog bites have been a source of a significant amount of the liability insurance losses suffered by community owners. Dog bites were the second largest cause of homeowners liability insurance losses in 2010. In January of this year, a pit bull attacked and killed a two year old in one of our client’s properties. The victim was the grandson of the dog’s owners.

If you only want to risk losing these four quality tenants as a last resort, there are alternative risk control measures you can take that may satisfy both you and your insurance company that this dog risk is manageable. First, check with prior management and other tenants about whether the dog(s) at issue has a history of aggressive behavior toward humans. A large vicious dog that has a history of biting a human, or attempting to bite one, can’t be tolerated and must be removed. Second, presuming the dog has no history of aggressive behavior towards humans, require the dog owning tenant to sign a document in which they agree to defend and indemnify the park in the event a liability claim arises due to the dog. Third, require the tenant to purchase liability insurance and name the park as an additional insured. Mobile Home Owners liability insurance is inexpensive, usually about $100/year for $300,000 in coverage. However, most mobile home owners insurance companies won’t offer this coverage to someone who owns an aggressive dog breed. Thus, the tenant will most likely have to purchase “canine/dog liability insurance.” Such policies typically cost about $600 per year for $300,000 of coverage. At that point, the tenant can choose between their heart and their wallet. If you Google “vicious dog liability insurance,” you will find companies that offer this coverage.

By Kurt Kelley, President, Mobile Insurance